Chapter 3 for test

The three sources of scale advantage which the Netflix DVD-by-mail business had over rivals imitating its effort were: -Brand, scale, data -Cinematch, collaborative filtering, the long tail -Network effects, switching costs, brand -A warehouse network, customer base, and long tail selection -Foresee, Nielsen, ACSI

A warehouse network, customer base, and long tail selection

Which term refers to a classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience? Crowdsourcing Collaborative filtering Cloud computing The long tail Data warehousing

Collaborative filtering

Netflix has been able to rapidly add the streaming business with similar cost economics and product offerings because the fundamentals of this business are very similar to the firm's DVD-by-mail business, just streamed over the Internet. True/False

False

The Netflix DVD-by-mail allowed users to pay per movie, akin to rental but with the efficiencies of an Internet business with inventory delivered via the mail. True/False

False

Why did Hastings regret going public as early as he did? -If the firm waited it could have raised more cash -Public firms pay far more taxes than private ones -Going public required the firm to reveal financial results, sharing its success with the world and attracting rivals -Going public required Hastings to give up a share of the firm, prompting his eagerness to affiliate with Microsoft and Facebook

Going public required the firm to reveal financial results, sharing its success with the world and attracting rivals

Firms enjoy _____ when they are able to leverage the cost of an investment across increasing units of production. absolute advantage complementary benefits scale economies economies of scope high stock market valuations

scale economies

Which of the following is a significant advantage of the long tail model on which Netflix is based? Scale advantage High bargaining power Scope advantage Absolute advantage Zero competition

Scale advantage

Which of the following was responsible for luring firms such as Wal-Mart and Blockbuster into direct competition with Netflix? The concept of crowdsourcing The low costs associated with streaming content online The Netflix IPO The ease of acquiring digital distribution rights The popularity of the blu-ray disc

The Netflix IPO

The phenomenon whereby firms can make money by selling a near-limitless selection of less popular products is known as _____. the grey market the product lifecycle economies of scale economies of scope the long tail

The long tail

Although Netflix had a larger distribution network than rivals, other firms could build a similarly large warehouse network. What additional advantage made this more profitable for Netflix than newcomers? -The bread of the firm's physical retail store network. -The long tail of products inside warehouses that rivals could never match. -The size of the firm's customer base, which enabled economies of scale. -The extent of analyst support in the investing community. -The computing power in the firm's proprietary data centers, which no rivals could replicate.

The size of the firm's customer base, which enabled economies of scale

Advertising can build _____, but brands are built through _____. product value; pricing strategies awareness; customer experience recognition; viral campaigns customer loyalty; funding image; television promotion

awareness; customer experience

Relate your understanding of Netflix dominance in the DVD-by-mail business to what you learned in the Strategy and Technology chapter: what three resources for competitive advantage did Netflix create in this market that rivals Blockbuster and Walmart couldn't match? bargaining power with suppliers, bargaining power with buyers, substitute goods lower search costs, proxy of quality, inspiring trust IPO, publicity, awareness brand, scale, data asset

brand, Scale, Data asset

While some debate the size of the "long tail," one fact that is critical to keep above this debate is that: -selection attracts customers and the Internet allows large-selection inventory efficiencies that offline firms can't match. -it makes business sense for offline firms to stock obscure titles. -the low cost of storefront maintenance make physical retail store models attractive. -a large collection of titles is not important in attracting subscriptions from customers. -more than 95 percent of the titles in the inventories of physical storefronts are viewed every three months.

selection attracts customers and the Internet allows large-selection inventory efficiencies that offline firms can't match.

To match content with customers, Netflix uses a proprietary recommendation system called Cinematch. While data and algorithms improve the service offered by Cinematch and further strengthen Netflix's brand, this data is also a(n): switching cost for the user. short tail factor. vehicle for selling advertising to film studios. redundancy factor for Netflix. additional overhead cost for Netflix.

switching cost for the user.